Commission On I.M.F. NO GROUNDS TO FEAR DOMINATION

Press, Volume C, Issue 29553, 30 June 1961, Page 10

Commission On I.M.F. NO GROUNDS TO FEAR DOMINATION

iTh« thtra of four extracts from the report of the Roual Commission on Monetaiy. Banking, ard Credit Systems. 1950-561

Domination by the United States or an International Financial Oligarchy 832. it was suggested to the] Commission that the Fund] and Bank are potent instruments of United States "im-j perialism" and that the aim, of the United States is world domination especially in the ■ sphere of trade and com--1 merce. It is obvious that, ; irrespective of the existence iof the Fund and of the Bank, the United States by virtue lof its size and wealth is already dominant in the' world economy. It is rele- ; leant to note, however, that, j I m the Fund, the United States has 27.750 votes: .'27.6 per cent, of the total) I (compared with 25.900 of the(Commonwealth (26.650 if New (Zealand joined), but has only lone executive director comJ pared with four from Comi monwealth countries < 833. Some Social Credit I witnesses seemed concerned I that the United States might, by manipulation of the Fund force other countries to accept unwanted imports of American surplus goods and prevent them from taking adequate measures to protect themselves from deflation and unemployment. A { realistic appraisal of the operations of the Fund i war does not give any reasonable grounds for fears I along the lines indicated I above. Nor was any evidence (brought before the Commission to support the allegation that the Fund or Bank were] I in any way dominated or con-] trolled by "Wall Street" or] by any conspiracy of inter-' I national financiers, either in-1 (dependently or in association i with Communists. 834. From this aspect. New I Zealand would surely be in I I a better position to place its I views on international finance! before the United States and I other countries if it became a member of the Fund than' if it remained outside the [ main organ of international co-operation in this field Loss of Imperial Preference 835. It has been stated that membership of the International Monetary Fund would mean the end of our right to continue imperia! preference. The Fund has nothing to do with imperial preference which comes within the scope of G ATT (The General Agreement on Tariffs and Trade), of which New Zealand is already a member.

Financial Costs of Membership 836. If we had joined the Fund and the International Bank in 1945 we xvould have been required: la) To pay to the Fund and the Bank 10 per cent, of our official holdings of gold and United States dollars, say about £1.6 million altogether. (b).To make available to the Fund, in New Zealand currency and securities. £16.7 million. <c) To make available to the International Bank, on call in New Zealand currency. £3.2 million. id) To make available to the International Bank, if borrowers default for substantial amounts la remote contingency), up to £14.3 million. 837. If this scale of contribution were retained, our immediate payments would be small—-approximately £1.6 million in gold or dollars. The present market value of the gold held by the Reserve Bank is £l2 million The New Zealand currency could • and normally would) be in the form of securities, not cash. The potential "burden" is remote and is not a great one, especially as any funds actually made available to the Fund or Bank would probably assist our exports, land would <in the case of the Fund) add to our own I drawing rights Intervention by Fund in Internal Policies | 838. Several witnesses feared such intervention, but the Fund has no authority i oyer the internal policies of member countries. The asser- ; tion that the Fund attempts Ito bring about deflation or unemployment is groundless The Governors of the Fund, too. are naturally interested in the well-being of their own countries.

839, Mr Jordan, counsel for the Social Credit Association, laid great stress on the fact that there was no Court of Appeal from decisions of the Board of Governors of the Fund and he considered that the Court of Appeal might well be the Court of International Justice The experience of the last n ne years does not’ appear to have d sclosed any need for such an appeal authority As Mr Ashwin said. “It is *ll based on trying to run It on a basis of co-operation." Repurchase Requirements 840 When a member buys foreign currency from the Fund it pays in its own currency. The Fund's holding of that member's currency is thereby increased. Later the member may be required to repurchase its own currency from the Fund and may have to use gold, dollars, or other convertible currency for th s purpose. If the currency originally purchased by the Fund was inconvertible, the provisions for repurchase could become onerous. However. the importance of th s question will decrease as more currencies become convertible. tVe Have Nothing to Gain 841. This view was voiced by several witnesses including Mr Otto, who said, "The main objection" to our joining the Fund, “Is that as far as trade and commerce are concerned we would have nothing to gain and as far as financial assistance and support are concerned it would be relatively insignificant. . . .” Question: There is no inherent vice in our joining but we have nothing to gain’ Mr Otto: We have nothing to gain 842 The Commission would comment that the traditional attitude of New Zealand with regard to international organisations has not been based purely on what we would gaia. but rather in many cases, for example the International Labour Organisation. on what we could give. But from a purely selfish point of view we have a great deal to gain by lending every possible support to any organisation designed to foster or smooth the path of world trade, for there are few countries so dependent on trade with others as New Zealand.